Wheat falls, worse to come

Wheat prices are expected to fall even further next year, after a significant drop last week. Wheat futures fell 5.1 per cent on the Chicago Board of Trade last week, figures released on Monday by Commonwealth Bank showed. But this was 36.2 per cent up on the same time last year, reports The Australian Financial Review. Senior commodities analyst and editor of Profarmer Grain Australia Malcolm Bartholomaeus said prices leading into the harvest next year would be about $220 to $230 a tonne, compared with the high $290s to $300 a tonne on a delivered port basis now. The prediction for next year was “still very robust pricing”, he said. He said last week’s drop of almost $18 in the Chicago Board of Trade price was a result of an increase in global wheat stocks. “In just a five-week period, 7 million tonnes was added to global wheat stocks, above what the trade had been expecting,” he said. The worst-case scenario would be another fall of up to $20 over the next month or so but it was “reasonably unlikely”. He said the peak price for the year was $319 a tonne, which farmers were paid in July, up $70 to $80 on the previous year. “In the medium term, the next three to four months, the price should hold fairly well,” he said. Statistics released by the Australian Bureau of Agricultural and Resource Economics and Sciences yesterday showed the average export value for Australian standard white wheat in the 2011-2012 financial year was $242.12 a tonne, compared with $283.27 a tonne in the previous period. The value of farm exports increased by about 14.5 per cent in 2011-12 to $36.4 billion and the volume of farm production increased by about 4 per cent, driven by a 10.6 per cent increase in the volume of grains and oilseeds production. Agriculture Minister Joe Ludwig said that after two years of high production, the value of grains and oilseeds exports increased by about 31 per cent in 2011-12 to $11.1?billion. “This has been a promising recovery for the sector after the difficult seasons of the last decade,” he said. Wheat farmer Ian Lucas, from Yumali in South Australia, said prices were the best farmers had seen in the past three to five years, if not longer. “Prices normally drop at this time of year,” he said. “A lot of buyers get close to filling their quotas and this year, there is more grain than what was expected.” “Forward contracts are going for around $280 a tonne but that’s risky,” he said. “But if we only get $220 a tonne, then we’ll be concerned about the budget for the following year.”